Alaska unemployment fund sitting pretty - unlike other states

Labor officials: 'Benefits are being paid, and are being paid timely'

Posted: Tuesday, July 28, 2009

By PAT FORGEY

While Alaska's unemployment rate is climbing, both state workers and employers are in a much better situation than many - and possibly most - other states, say employment security officials with the state and federal governments.

Alaska's unemployment rate has climbed to 8.4 percent, the highest it has been in 20 years, but the state's Unemployment Insurance Trust Fund is flush with $330 million to keep benefits coming.

"Benefits are being paid, and are being paid timely," said Tom Nelson, director of the Employment Security Division in the state Department of Labor and Workforce Development.

Far larger states, such as Tennessee and Connecticut, have less in savings than Alaska.

"We keep an adequate amount in there so we can weather a storm of bad times," Nelson said.

About half the state's 31,139 unemployed qualify for benefits, he said.

In some states, funds are being depleted quickly, and in 14 they're gone. Those states have to borrow from the Federal Unemployment Trust Fund.

"We are doing great, compared to other states," Nelson said.

The biggest problem has been economically devastated Michigan, where savings were minimal even before the recession hit.

While the federal trust fund holds $20 billion, $8 billion has been lent out to needy states. Michigan, which has the nation's highest unemployment rate at 12.9 percent, has borrowed $2 billion so far to pay benefits.

Nelson said that many of those troubled states created their own problems.

"A lot of them have reduced (unemployment insurance) taxes over time, and at the same time increased benefits. Eventually, something has to give," he said.

Because each state can manage its own program, Alaska pays benefits for people who quit their jobs, Nelson said.

That's because in Alaska, in contrast to some other states, employees contribute to the unemployment insurance from their pay along with employers.

There is a six-week disqualification period before the benefits begin, however, encouraging a quick return to the workforce.

"We like to see people back to work as soon as they can," Nelson said.

Even with Alaska's rising unemployment rate, hiring remains strong with the state's seasonal economy, with 35,000 new jobs since the beginning of the year.

Benefits in Alaska were recently increased to a maximum of $370 a week, which Nelson said the trust fund can handle without risk.